China and the World, Talking Point

Cameron seeks to charm

British leader pulls out all the stops to boost China relations during trip


“Anyone for wiff-waff?”: British Prime Minister David Cameron plays table tennis at a school in Chengdu

He would bend on a single knee to his sovereign but on both knees only to his God. This was Lord Macartney’s retort when told he must put his forehead to the floor in the presence of Emperor Qianlong on arriving at the Chinese court in 1793.

Macartney refused and as far as WiC is aware, no British politician has ever kowtowed in China, even if one prime minister did stoop (inadvertently) low in Beijing in the 1980s.

According to a civil servant interviewed by the Independent newspaper, Margaret Thatcher “was a great exception to the general rule among political and business leaders, that having reached Beijing and had their tummies tickled, they are captivated by the place, seeing themselves as latter-day Marco Polo figures.”

Instead Thatcher regarded China as “a rather unpleasant place governed by rather unpleasant people” (if the same civil servant is to be believed). But on a visit there to discuss the future of Hong Kong, she famously tripped down the steps of the Great Hall of the People. The subsequent footage of the Iron Lady on her knees made the news bulletins, with the unspoken symbolism that she was kowtowing across Tiananmen Square towards Mao’s mausoleum.

Thatcher’s rather bleak outlook on things Chinese offers a huge contrast to David Cameron’s view today, after the current British prime minister spent much of the past week telling media that he wants to become “China’s strongest advocate in the West”.

Cameron made Britain’s case keenly. “Put simply, there is no country in the Western world more open to Chinese investment, more able to meet the demands of Chinese consumers, or more willing to make the case for economic openness in the G8, the G20 and the European Union,” he told Century Weekly magazine.

Cameron was in China for a three-day trip, visiting three cities, sitting down to two state banquets, announcing £5.6 billion ($9.17 billion) of deals, and even making his personal debut on weibo, China’s Twitter-like equivalent.

Yet the flurry of activity was a huge contrast from just a few months ago, when he couldn’t even get anyone in Beijing to agree to an appointment. Why the turnaround and what happened on the trip?

So what was the problem for British relations with China?

Soon after Cameron took office, he announced that his deputy Nick Clegg would oversee Britain’s relationship with Beijing, while he would handle diplomatic ties with India. As WiC said at the time, the Chinese wouldn’t have been thrilled at being delegated to a subordinate, and it’s notable that on this week’s jamboree Cameron is front-and-centre, while Nick Clegg has stayed at home.

His demeanour this time also contrasts markedly with three years ago, when he made his first trip to China as prime minister. That visit generated a classic case of cross-cultural misunderstanding. Asked by his host to remove the poppy that commemorates Britain’s war dead, Cameron refused. For the Chinese, defeated by the British in two opium wars, the flower has a different meaning.

But much worse was to come as far as the Chinese were concerned, when Cameron and Clegg met the Dalai Lama at St Paul’s Cathedral in London in May last year. The British knew that the Chinese would be furious but hoped to soothe some of their indignation by giving advance notice of the meeting, highlighting that it was a private one, and making sure that it didn’t take place on government property. But it didn’t work: China’s foreign ministry was soon announcing that the rendezvous had “hurt the feelings of the Chinese people” and the British ambassador was summoned for a lecture on how Britain had “seriously interfered with China’s internal affairs” and must deliver “practical actions to correct the error”.

Relations then went into deep freeze. Chinese delegations visiting the UK were shorn of their senior representatives, while British ministers were shunned on their visits to China. The spat culminated in the cancellation of a trip from Cameron himself in April, when nobody senior in the Chinese government would agree to meet him.

Are Sino-British ties warming again?

Cameron’s office has been briefing that this week’s trip is the chance to “turn the page” on the diplomatic row but the mollification process has been underway for a while, with confirmation from Cameron in Parliament in May that Britain did not support Tibetan independence. There have been wider efforts to improve the mood too, like the introduction of new visa arrangements that make it easier for Chinese visitors to come to Britain, an announcement that Chinese investment is welcome in Britain’s nuclear power sector, plus an agreement to loosen the rules for Chinese banks setting up in the UK (see WiC211).

Two months ago Boris Johnson also turned up in Beijing as part of the charm offensive. Truth be told, London’s mayor is best known by the Chinese for looking scruffy at the closing ceremony of the Beijing Olympics and there were signs that he remained mysterious during his current visit, when interpreters retreated to the stock phrase “he told a joke” to explain some of his efforts to win over his audience.

But the mayor ploughed on, undaunted. One of his gags referred to a Chinese investment in a London building that featured in last year’s Bond film Skyfall – supposedly as the headquarters of MI6. “If that isn’t openness to China, I don’t know what is,” he claimed. “We are not only working together on our nuclear programme; we have sold you the office of our secret service. Saves time, I imagine.”

Moving on to Peking University, Johnson then introduced Harry Potter as incontrovertible proof of the “cultural interpenetration” of the two countries. “Who is the first person he kisses?” he asked. “That’s right, Cho Chang – a Chinese overseas student at Hogwarts school. Ladies and gents I rest my case. I don’t think I need to argue any further, that is the future of Britain and of London.”

Cameron got smiles too?

Cameron has tried to establish more personal ties, opening his dialogue with netizens last week with a jaunty: “Hello my friends in China. I’m pleased to have joined Weibo and look forward to visiting China very soon.”

Within a couple of days he had picked up more than 200,000 followers, even if the BBC was reporting that some seemed keener to goad him than greet him.

“Mr Prime Minister, are you bringing opium with you?” queried one, referring to the wars fought with Britain in the nineteenth century. “When will you compensate us for the Old Summer Palace?” asked another, recalling its looting and burning in 1860 by troops from Britain and France.

Others chose to chide Cameron for his meeting with the Tibetan spiritual leader last year. “Please confirm if you plan to meet the Dalai Lama again,” asked one. “Because if you do, don’t come to China again, as you aren’t welcome.”

The Global Times also sounded dismissive of their visitor in a grouchy editorial headlined “China won’t fall for Cameron’s ‘sincerity’ ”.

“Beijing needs to speed up the pace of turning its strength into diplomatic resources and make London pay the price when it intrudes into the interests of China,” it demanded, before throwing doubt on Britain’s credentials on the international stage. “The Cameron administration should acknowledge that the UK isn’t a big power in the eyes of the Chinese,” it scoffed. “It is just an old European country suitable for travel and study abroad, with a few good football teams.”

Other sections of the Chinese media chipped in as well, saying they knew why the British were in town – to drum up business. The plan was to get “a bite of the cake”, said Shenzhen TV, but other countries wanted the same, so if the British don’t come soon there will only be crumbs left.

Phoenix TV, another channel, made a similar point, claiming that China’s relations with Germany and France have improved, so Britain can’t afford to delay any longer.

Jiang Shixue, a scholar from the Chinese Academy of Social Sciences with a weibo following of 700,000, made it even more personal. Cameron was in China simply for the money, Jiang agreed, but he had probably come under instructions from his mother-in-law, whose home furnishing company (called Oka) has a Shanghai showroom!

(Ironically, Cameron has come in for flak back in Britain for inviting his father-in-law, deputy chairman of a media company, on the trip too.)

So Britain has a commercial agenda?

Unapologetically so, with Cameron telling Britain’s embassies last year that they needed to become “showrooms for our cars, department stores for our fashions and technology hubs for British start-ups.”

This is part of his government’s focus on boosting the economy with more exports, more manufacturing and more investment.

“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward,” George Osborne, Britain’s chancellor of the exchequer, proclaimed two years ago. “A Britain carried aloft by the march of the makers.” But British business isn’t going to get airborne without a bigger share of trade with China. And although exports have increased, they haven’t grown as quickly as the Chinese market in general, meaning that Britain is actually losing share, according to the latest government data. In fact, Ireland and Belgium are larger markets for British goods than China, which is “lamentable”, according to Stephen King, HSBC’s Global Chief Economist, who was interviewed in The China Trade, WiC’s Focus issue earlier this year.

King added that British exports to China were “almost a rounding error” as a percentage of GDP.

That means that Cameron is in catch-up mode and was pitching Britain’s case competitively this week. “In Europe, we’re the ones arguing for more trade, more engagement, more market access. Britain has been in the lead on these issues,” he told reporters, promising to do his best to get the Chinese a free trade treaty with the EU. Back in Brussels meanwhile, the European Commission was less enthusiastic, describing the British idea as “premature”. But Cameron likely views his suggestion as a no-lose situation. He can claim credit if a deal comes off, but if it doesn’t he points the finger, and reiterates to the Chinese they will get a better reception trading with Britain than they might with other parts of Europe.

How about investment?

Here Britain’s claim to leadership is more clear-cut, ranking fourth last year as a recipient of Chinese investment.

It’s also true that the UK has been more open to Chinese capital than almost any other developed country, with the sound bite this week that it has welcomed more Chinese money in the last 18 months than in the previous 30 years

One example is Chinese networking giant Huawei, which has been forced to run the gauntlet of a series of investigations in the United States and blocked on bidding for telecom infrastructure projects in Australia and Canada.

In the UK the welcome has been warmer, something that George Osborne made plain on a visit to China in October that included a trip to the company’s headquarters in Shenzhen.

“There are some Western governments that have blocked Huawei from making investments,” he crowed. “Not Britain. Quite the opposite. I was pleased to welcome Huawei’s opening of a flagship office in our country in June and the £1.3 billion of investment that came with it.”

The indications are that Britain wants more Chinese investment. Cameron left open the possibility of Chinese bids to build HS2, the planned high-speed railway linking London and the north of the country and spoke positively about the prospects for the future. “I’m not embarrassed that China is investing in British nuclear power, or has shares in Heathrow airport, or Thames Water, or Manchester airport. I think it’s a positive sign of economic strength that we are open and welcome to Chinese investment. That gives, if you like, the British government more firepower to use the capital investment we have for more roads and railways and other things,” he insisted.

Accompanying Cameron on his trip was the largest delegation of British business folk to visit China, providing a visual example of commitment as they disembarked en masse at the airport in Beijing.

But is Cameron trying too hard?

That’s the accusation from critics urging him to act “like a statesman, not a salesman” in China. The complaint is loudest from those who wanted more focus on human rights during the trip, including an observation that, despite getting the cold shoulder politically from Beijing over the last 18 months, Britain’s trade with China has increased, with incoming investment hitting record levels.

Writing in the Telegraph, Mark Leonard, author of What Does China Think, also warned Cameron not to appear too meek in Beijing, where “weakness is often an invitation for aggression”.

British officials deny that they have bent to Beijing’s will, saying that Cameron’s speech on Tibet in May was confirmation of pre-existing policy. According to the Financial Times, they have also been briefing that Britain refused to be corralled into signing a joint statement on the Dalai Lama issue, as France and Germany were previously. And in a further sign that there is spit left in the British bugle, Cameron’s office slammed the exclusion of a Bloomberg journalist from a press conference on Monday as “completely inappropriate”, letting it be known that their boss had raised the matter personally with President Xi Jinping.

Britain would prefer to focus on the sweet spots?

In typical trade-tour style, the delegation announced a series of deals with the Chinese during its visit. The headline item was the £4.5 billion deal by Jaguar Land Rover to sell 100,000 cars to Chinese drivers next year, although the British media was soon suggesting that this looked more like an estimate for cars that JLR hopes to sell to its China distributor.

Other newspapers reminded readers that the formerly British firm has been a subsidiary of the Indian carmaker Tata Motors since 2008.

In a selection of the other deals Geely, the Chinese carmaker, confirmed its latest £80 million investment in Manganese Bronze, the manufacturer of London’s taxis. SolaQuaGen won a £225 million deal for desalination plants in China, while Surrey Satellites trumpeted a £110 million tender on a new satellite system.

But Britain’s hope is that it is better positioned than its commercial rivals for the medium-term, as the Chinese economy shifts away from manufacturing and investment and more towards consumer demand and services, a trend that WiC reviewed in The China Trade this year

One area on show this week was education, where Cameron told a university audience in Shanghai that there was “no limit” on the number of Chinese that could study in Britain and that he hoped to raise numbers well beyond the current 105,000 total.

British prowess in culture and entertainment also featured strongly on the trip, with giant screens playing scenes from the costume drama Downton Abbey and James Bond’s Skyfall at one event. There was even a surprise appearance from a life-size model of the horse from the theatre hit War Horse, with news that a deal has been struck for a Chinese-language production of the show.

“When War Horse arrived in that banquet today there was an audible gasp from people – they just couldn’t believe what they were seeing,” Cameron crowed.

So an all-round charm offensive then?

The contrast with Cameron’s first China trip was nowhere more stark than in the gifts he bestowed. As we reported in WiC212, his last offering (a Downing Street water jug) was almost offensively unimaginative.

This time a bit more thought went into the presents. Soccer fan Xi Jinping got a shirt signed by the England team. China’s premier, Li Keqiang (a tennis devotee) got a racquet signed by Wimbledon winner Andy Murray. Most interesting of all, state media reported that Xi’s wife, Peng Liyuan received a pair of Mulberry gloves. Given her status as a local fashion icon (see WiC187), it would be no surprise if the UK fashion house saw a spike in its China sales as a result.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.